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38. The Sarbanes-Oxley Act tightened corporate governance rules by requiring all but which
one of the following?
39. The success of common stock investments depends on the success of _________.
40. The historical average rate of return on large company stocks since 1926 has been _____.
41. The average rate of return on U.S. Treasury bills since 1926 was _________.
42. An example of a real asset is:
I. A college education
II. Customer goodwill
III. A patent
43. The 2002 law designed to improve corporate governance is titled the _____.
44. Which of the following is
not
a financial intermediary?
45. The combined liabilities of American households represent approximately __________ of
combined assets.
46. In 2011 real assets represented approximately __________ of the total asset holdings of
American households.
47. In 2011 mortgages represented approximately __________ of total liabilities and net worth
of American households.
48. Liabilities equal approximately _____ of total assets for nonfinancial U.S. businesses.
49. Which of the following is
not
an example of a financial intermediary?
50. Real assets represent about ____ of total assets for commercial banks.
51. Money market securities are characterized by:
I. Maturity less than 1 year
II. Safety of the principal investment
III. Low rates of return
52. After much investigation, an investor finds that Intel stock is currently underpriced. This is
an example of ______.
53. After considering current market conditions, an investor decides to place 60% of her funds
in equities and the rest in bonds. This is an example of _____.
54. Suppose an investor is considering one of two investments that are identical in all
respects except for risk. If the investor anticipates a fair return for the risk of the security he
invests in, he can expect to _____.
55. The efficient market hypothesis suggests that _______.
56. In a perfectly efficient market the best investment strategy is probably _____.
57. Market signals will help to allocate capital efficiently only if investors are acting _____.
58. Which of the following is (are) true about hedge funds?
I. They are open to institutional investors.
II. They are open to wealthy individuals.
III. They are more likely than mutual funds to pursue simple strategies.
59. Venture capital is _________.
60. Individuals may find it more advantageous to purchase claims from a financial
intermediary rather than directly purchasing claims in capital markets because:
I. Intermediaries are better diversified than most individuals
II. Intermediaries can exploit economies of scale in investing that individual investors cannot
III. Intermediated investments usually offer higher rates of return than direct capital market
claims
61. Surf City Software Company develops new surf forecasting software. It sells the software
to Microsoft in exchange for 1,000 shares of Microsoft common stock. Surf City Software has
exchanged a _____ asset for a _____ asset in this transaction.
62. Stone Harbor Products takes out a bank loan. It receives $100,000 and signs a promissory
note to pay back the loan over 5 years. In this transaction, _____.
63. Which of the following firms was
not
engaged in a major accounting scandal between
2000 and 2005?
64. Accounting scandals can often be attributed to a particular concept in the study of finance
known as the _____.
65. An intermediary that pools and manages funds for many investors is called ______.
66. Financial institutions that specialize in assisting corporations in primary market
transactions are called _______.
67. When a pass-through mortgage security is issued, what does the issuing agency expect to
receive?
68. In 2008 the largest corporate bankruptcy in U.S. history involved the investment banking
firm of ______.
69. The inability of shareholders to influence the decisions of managers, despite
overwhelming shareholder support, is a breakdown in what process or mechanism?
70. Real assets are ______.
71. A major cause of mortgage market meltdown in 2007 and 2008 was linked to ________.
72. In recent years the greatest dollar amount of securitization occurred for which type of
loan?
73. Which of the following is (are) true about nonconforming mortgage loans?
74. The systemic risk that led to the financial crisis of 2008 was increased by _____.
75. An investment adviser has decided to purchase gold, real estate, stocks, and bonds in
equal amounts. This decision reflects which part of the investment process?
